01—Abstract
Summary
Summary of the 8-K filed June 17, 2024. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation reported second-quarter 2024 results for the quarter ended May 31, 2024, in a press release furnished as Exhibit 99.1 to this Form 8-K.
Net earnings attributable to Lennar were $954 milliona, or $3.45 per diluted share, compared with $872 million, or $3.01 per diluted share, a year earlier. Excluding mark-to-market losses on technology investments and a one-time gain on the sale of a technology investment, adjusted net earnings were $935 million, or $3.38 per diluted share. Total revenues were $8.8 billion.
New orders rose 19% to 21,293 homes, deliveries rose 15% to 19,690 homes, and the average sales price of homes delivered was $426,000,b down 5% from the prior year as the company used more incentives. Homebuilding gross margin on home sales was 22.6%, up 10 basis points, and selling, general and administrative expenses rose to 7.5% of home sales revenues from 6.7%. Financial Services operating earnings were $146 million.
The balance sheet remained strong, with Homebuilding cash and cash equivalents of $3.6 billionc, no borrowings under the $2.2 billion revolving credit facility, total liquidity of $5.8 billion, and Homebuilding debt to total capital of 7.7%. During the quarter the company repurchased 3.8 million shares for $603 million and repaid $554 million of senior notes. For the third quarter of 2024, Lennar guided to 20,500 to 21,000 deliveries and new orders, an average sales price of $420,000 to $425,000, and a gross margin on home sales of about 23.0%.
Management reiterated its target of delivering 80,000 homes for the full year, with a margin consistent with last year. The company will hold a conference call on June 18, 2024, at 11:00 a.m. Eastern Time.
02—Key points
Key Highlights
- Net earnings attributable to Lennar rose to $954 million, or $3.45 per diluted share, versus $872 million, or $3.01 per diluted share, a year earlier; excluding technology investment items, EPS was $3.38.
- New orders increased 19% to 21,293 homes and deliveries increased 15% to 19,690 homes.
- Average sales price of homes delivered fell 5% to $426,000 as pricing to market through incentives and product mix reduced prices, while homebuilding gross margin improved to 22.6%.
- Homebuilding debt to total capital was 7.7%, with $3.6 billion of Homebuilding cash, no revolver borrowings, and $5.8 billion of overall liquidity.
- The company repurchased 3.8 million shares for $603 million and redeemed $454 million of 4.50% senior notes due April 2024 and repurchased $100 million of 4.75% senior notes due November 2027.
- Owned homesites fell to 1.2 years of supply from 1.7 years a year earlier, and controlled homesites rose to 79% from 70%, reflecting the land light strategy.
- Third-quarter 2024 guidance calls for 20,500 to 21,000 deliveries, an average sales price of $420,000 to $425,000, and a gross margin of about 23.0%, with a full-year target of 80,000 homes.
03—Questions
Frequently Asked Questions
How did Lennar perform in the second quarter of 2024?
Lennar reported net earnings of $954 million, or $3.45 per diluted share, up from $3.01 per diluted share a year earlier. On an adjusted basis, excluding mark-to-market losses on technology investments and a one-time gain on a technology investment sale, EPS was $3.38. Total revenues were $8.8 billion.
What drove the growth in homebuilding activity?
New orders rose 19% to 21,293 homes and deliveries rose 15% to 19,690 homes. Management attributed the sales strength to increased sales incentives, even as interest rate movements tested affordability.
How is pricing and margin trending?
The average sales price of homes delivered was $426,000, down 5% from the prior year, reflecting greater use of incentives and product mix. Gross margin on home sales was 22.6%, up 10 basis points, as construction cost reductions offset lower prices and higher land costs.
How strong is Lennar's balance sheet and how is it returning capital?
Homebuilding cash and cash equivalents were $3.6 billion, the $2.2 billion revolving credit facility was undrawn, and total liquidity was $5.8 billion. Homebuilding debt to total capital was 7.7%. During the quarter the company repurchased $603 million of common stock and repaid $554 million of senior notes.
What is the outlook for the third quarter and full year 2024?
For the third quarter, Lennar expects 20,500 to 21,000 new orders and deliveries, an average sales price of $420,000 to $425,000, a gross margin on home sales of about 23.0%, and Financial Services operating earnings of $135 million to $140 million. Management remains focused on delivering 80,000 homes for the full year, with a margin consistent with last year.
04—Continue